Vishankumari Udaysingh Varma Thr. her Daughter and Constituted Attorney Manju U. Varma and Another Vs. Vijaysingh Rajasingh Varma and Others - Court Judgment

Oral Judgment: (G.S. Kulkarni, J.)

1. This appeal is directed against the judgment and order dated 28th December 2015 passed by the learned Joint Civil Judge, Senior Division, Thane whereby Special Civil Suit No.432 of 2015 (for short 'the suit') has been dismissed as not maintainable in view of the bar as prescribed under Order XXIII Rule 3 A of the Code of Civil Procedure, 1908.

2. The contesting respondent in this appeal is defendant no.24 who filed an application in the suit, raising an objection to the maintainability of the suit in view of the provisions of Order XXIII Rule 3A of the Code of Civil Procedure 1908, as the appellants/plaintiffs was inter alia seeking a declaration that the compromise decree dated 22 July 2004 in Special Civil Suit No.230 of 1987 be set aside. This application was contested by the appellants/plaintiffs inter alia contending that the suit was maintainable inasmuch as though it was prayed that the compromise decree in Special Civil Suit No.230 of 1987 be set aside, however there were also other independent prayers in the plaint. Appellants also contended that the said compromise decree was obtained by fraud and thus on this count the suit was not barred under Order XXIII Rule 3A of the C.P.C.

3. Learned counsel for the appellants in assailing the impugned orders passed by the learned trial Judge would contend that the bar under Order XXIII rule 3A of the CPC to the maintainability of the suit was not applicable. Our attention is drawn to the prayers as made in the plaint to contend that reliefs as prayed in the plaint are not only for a declaration that the compromise and the consequent decree in Special Civil Suit No.230 of 1987 were illegal but, for other substantive reliefs. In this regard reliance is placed on prayer clause (g) of the plaint to point out that the appellants has prayed for a declaration in regard to entitlement to 50% of the mesne profit/gross sale proceeds earned by defendant nos.1 to 6,11/1,11/6,17 to 20 and 24 pursuant to consent terms dated 27 April, 2004 in Special Civil Suit No.230 of 1987 and the decree thereof dated 22 July, 2004, which is an independent relief. It is next submitted that the plaint contains allegations that the decree in Special Civil Suit No.230 of 1987 is obtained by fraud and thus in any case a separate suit was maintainable. In support of his submissions learned counsel for the appellants has placed reliance on the decision of the learned Single Judge of this Court in the case of Jethalal C.Thakkar and ors vs Lalbhai Hiralal Shah (1986 (O) BCI 52)and in case of Smt Anita vs Rambilas (AIR 2003 Andhra Pradesh 32).

4. On the other hand, Mr.Dhakephalkar learned senior counsel appearing for the contesting respondent (defendant no.24) submits that the impugned order does not call for any interference. In his submission the learned trial judge has appropriately held that a separate civil suit for setting aside of the decree on the basis of the compromise was not maintainable, as Order XXIII Rule 3A of CPC created an absolute bar to file such a suit. Mr.Dhakephalkar would submit that if the contentions as raised on behalf of the appellants are accepted, the same would frustrate the very rationale and object behind Order XXIII Rule 3A of the CPC and defeat the said provision. Mr.Dhakephalkar has drawn our attention to the prayers as made in the said plaint to contend that even the other prayers as made in the plaint revolve around the consent terms and thus a camouflage argument of the appellants as noted above should not be accepted. In support of his submissions Mr.Dhakephalkar has placed reliance on the decision of the Supreme Court in the case of Banwari Lal vs. Chando Devi (Smt Through LRS) and anr (1993) 1 Supreme Court Cases 581)and the decision of the learned Single Judge of this Court in the case of Dr.Damodar Tukaram Gaunkar vs. Gopinath Rama Gaunkar and ors. (2006 (3) ALL MR 88).

5. We have perused the impugned order as also the plaint in the civil suit in question. Admittedly, Special Civil Suit No.230 of 1987 was disposed of by the Civil Court in view of the compromise which was entered between the parties dated 27 April, 2004 and the consequent decree dated 22 July, 2004 passed thereon. The suit in question which is filed in the year 2012, after about eight years of the compromise decree passed in Special Civil Suit No.230 of 1987 admittedly is on the ground that the said compromise was not acceptable to the appellants/plaintiffs on the following grounds as also noted by the trial Court. :

(i) the consent terms on record are totally different from those which were shown to the defendant no.7;

(ii) the signatures of their power of attorney only appears on the last page of the consent terms while the signatures of other parties are on every page of the consent terms;

(iii) for defendant no.10 the defendant no.7 as well as Nitin Game appeared to have signed;

(iv) the interested parties tampered with the consent terms at a certain stage for their personal benefits;

(v) the consent terms consist of an illogical and disjointed set of paragraphs;

(vi) the memorandum of understanding and the agreement referred in the consent terms are not exhibited with the consent terms;

(vii) the defendant no.7 signed the consent terms for defendant no.11 who was no more at that time;

(viii) the defendant no.1 at one place declared as exclusive owner of the property and at other place get the benefit of a share in gross cells of about 21%;

(ix) on one hand the plaintiffs and the defendant no.7 to 9 totally relinquished their rights and on the other hand undertake to indemnify the defendant no.1;

(x) the plaintiffs have not received any consideration under any of the agreement;

(xi) The document of consent term is tempered document and manipulated to defraud the appellant/plaintiff.

6. It is thus clear from the above contentions of the appellants/plaintiffs as also the prayers as made in the plaint that the principal relief as prayed in the suit is to seek annulment of the consent decree in Special Civil Suit No.232 of 1987 which is admittedly passed on the basis of a compromise dated 27 April 2004. In fact all the prayers are in the context of the compromise decree.

7. However, to examine the contention as urged on behalf of the appellants and more particularly the contention that as the appellants had pleaded fraud in the plaint the suit was not barred under Order XXIII Rule 3A, it would be useful to note the provisions of Order XXIII Rule 3 and Rule 3A as inserted by CPC (Amendment) Act,1976 and the legislative scheme as flows therefrom:

O.XXIII R.3.Compromise of suit Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise (in writing and signed by the parties) or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith (so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit):

Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question, but no adjournment shall be granted for the purpose of deciding the question, unless the court, for reasons to be recorded, thinks fit to grant such adjournment).

Explanation An agreement or compromise which is void or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful within the meaning of this rule.)

O.XXIII R.3A. Bar to suit No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.

8. Rule 3 thus clearly envisages that in a case where a question arises whether or not there is a lawful compromise or an agreement in writing and signed by the parties, the question whether such agreement or compromise is lawful is required to be determined by the Court which has passed the decree. Further from a plain reading of the proviso to Rule 3 it is clear that where one party to a suit alleges that an adjustment or satisfaction has been arrived at, and the same is denied by the other party, then in that event the Court shall decide the question. The explanation to Rule 3 also provides that such adjustment, satisfaction or compromise if is void or voidable under the Indian Contract Act,1872, then it shall not be deemed to be lawful for the purpose of Rule 3. Further as to whether the decree is lawful, the test would be as explicitly laid down in the explanation, namely that the Court would test the allegations whether the agreement or compromise is void or voidable under the Contract Act. Thus, a plea as taken by the appellants that the appellants were defrauded to enter into a compromise leading to the decree in Special Civil Suit No.230 of 1987 is an issue which would fall within the ambit of Order XXIII Rule 3 which could be urged before the Court which passed the decree.

9. It is thus clear that such issues by which one party alleges/disputes the legality of the compromise decree is required to be gone into by the same Court which has passed the decree as manifest from Rule 3 of Order XXIII of C.P.C. and it would not be admissible to file a suit to challenge such compromise decree. The legislature has reinforced the intention which flows from Order XXIII Rule 3 by enacting Order XXIII Rule 3A which bars a suit to set aside a decree on the ground that the compromise on which the decree is passed was not lawful. A conjoint reading of the provisions of Rule 3 and Rule 3A of Order XXIII thus necessarily implies that a party to an earlier suit cannot bring a fresh suit to assail a decree of the Court passed under a compromise. The intention of the legislature is that the compromise decree shall not be subjected to protracted litigation in a subsequent suit which may be brought by any of the parties to challenge a decree based on a compromise. This is to achieve the object of conferring a sanctity to a compromise decree and avoid unwarranted litigation. In this legislative scheme we may also note two more provisions which would throw a further right on the issue firstly section 96 (3) of CPC which expressly bars an appeal from a decree passed by the Court with consent of parties and secondly Order 43 Rule 1A which provides for a remedy of appeal when a party intends to assail a decree on the ground that a compromise should not have been recorded. From a plain reading of the said provisions it is very clear that a fresh suit by one of the parties to assail a compromise decree is not maintainable.

10. The Supreme Court in the case of Banwari Lal vs Chando Devi (supra) considered the purpose and object of the Code of Civil Procedure, 1908 Amendment Act 1976 and held that the proper remedy for the party assailing a decree on compromise will be to file an application to recall the order regarding the compromise entered into between the parties to a suit in dealing with the issue. The Court had made the following observations:

7. By adding the proviso along with an explanation the purpose and the object of the amending Act appears to be to compel the party challenging the compromise to question the same before the Court which had recorded the compromise in question. That Court was enjoined to decide the controversy whether the parties have arrived at an adjustment in a lawful manner. The explanation made it clear that an agreement or a compromise which is void or voidable under the Indian Contract Act shall not be deemed to be lawful within the meaning of the said Rule. Having introduced the proviso along with the explanation in Rule 3 in order to avoid multiplicity of suit and prolonged litigation, a specific bar was prescribed by Rule 3A in respect of institution of a separate suit for setting aside a decree on basis of a compromise saying :

3A. Bar to suit - No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.

11. We may also refer to a recent decision of the Supreme Court in the case of R.Rajanna vs S.R.Venkataswamy and Ors. (AIR 2015 SC 706).In this decision considering the provision of Order XXIII Rule 3 and Rule 3A the decision in Banwarilal (supra) as also the decision in Pushpadevi Bhagat vs Rajinder Singh (2006) 5 SCC 566)the Supreme Court held that the issue as to whether an agreement or compromise leading to a decree in a suit is lawful, is required to be raised before the Court that passed such decree and it is that court alone which can examine and determine that question as Order XXIII Rule 3A clearly bars a suit and set aside the decree on the ground that the compromise on which the decree is drawn is not lawful.

The Supreme Court thus held as under:

8. The precise question that falls for determination in the above backdrop is whether the High Court was right in directing the appellant to seek redress in the suit having regard to the provisions of Order XXIII, Rule 3 and Rule 3A of CPC.

10. It is manifest from a plain reading of the above that in terms of the proviso to Order XXIII Rule 3 where one party alleges and the other denies adjustment or satisfaction of any suit by a lawful agreement or compromise in writing and signed by the parties, the Court before whom such question is raised, shall decide the same. What is important is that in terms of Explanation to Order XXIII Rule 3, the agreement or compromise shall not be deemed to be lawful within meaning of the said rule if the same is void or voidable under Indian Contract Act, 1872. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties, the question whether the agreement or compromise is lawful has to be determined by the Court concerned. What is lawful will in turn depend upon whether the allegations suggest any infirmity in the compromise and the decree that would make the same void or voidable under the Contract Act. More importantly, Order XXIII Rule 3A clearly bars a suit to set aside a decree on the ground that the compromise on which the decree is based was not lawful. This implies that no sooner a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise, it is that Court and that Court alone who can examine and determine that question. The Court cannot direct the parties to file a separate suit on the subject for no such suit will lie in view of the provisions of Order XXIII Rule 3A of CPC. That is precisely what has happened in the case at hand. When the appellant filed OS No.5326 of 2005 to challenge validity of the compromise decree, the Court before whom the suit came up rejected the plaint under Order VII Rule 11 CPC on the application made by the respondents holding that such a suit was barred by the provisions of Order XXIII Rule 3A of the CPC. Having thus got the plaint rejected, the defendants (respondents herein)could hardly be heard to argue that the plaintiff (appellant herein) ought to pursue his remedy against the compromise decree in pursuance of OS No.5326 of 2005 and if the plaint in the suit has been rejected to pursue his remedy against such rejection before a higher Court.

11. The upshot of the above discussion is that the High Court fell in a palpable error in directing the plaintiff to take recourse to the remedy by way of separate suit. The High Court in the process remained oblivious of the provisions of Order XXIII Rules 3 and 3A of the CPC as also orders passed by the City Civil Court rejecting the plaint in which the Trial Court had not only placed reliance upon Order XXIII Rule 3A but also the decision of the Court in Pushpa Devi s case (supra) holding that a separate suit was not maintainable and that the only remedy available to the aggrieved party was to approach the Court which had passed the compromise decree. The following passage from the decision of Pushpa Devi (supra) case is, in this regard, apposite:

12. Adverting to the facts of the present case which we have noted and in view of the above clear position in law we are certain that the suit in question was clearly barred by the provisions of Order XXIII Rule 3A of the CPC. Learned counsel for the respondent has appropriately relied on that decision of the learned Single Judge in the case of Dr.Damodar Gaunkar (supra) the learned single Judge taking into consideration the decision in Banwarilal (supra) has held that a separate suit would not be maintainable to challenge a consent decree and that it would be necessary for an aggrieved party to file an application before the same Court.

13. In view of the authoritative pronouncements of the Supreme Court in the case of Banwarilal (supra) and in the case of R.Rajanna (supra) reliance on behalf of the appellants on the decision of the learned single Judge of this Court in Jethalal Thakkar's case (supra) is inappropriate. We may note that in Banwarilal the Supreme Court had considered issue of collusion and fraud as had arisen in the said case namely a contention that a fabricated petition of compromise was filed, which is clear from the contents of para 4 of the decision of the Supreme Court examining the said issue the Supreme Court had come to a conclusion that a separate suit was not maintainable as noted by us above in extenso. In view of this clear position in law as laid down in Banwarilal (supra), the appellants contention relying on Jethalal Thacker's case, that as the appellant had pleaded fraud in relation to the compromise a separate suit was maintainable, cannot be accepted.

14. We are in complete agreement with the observations which are made by the learned trial judge in the impugned order. Having examined the facts as pleaded on behalf of the appellants/plaintiffs in the plaint in our opinion it was not open for the appellants to assail compromise decree dated 22 July 2004 by filing the suit in question. The suit was clearly barred under Order XXIII Rule 3A of the CPC. The learned trial Judge has rightly dismissed the suit as not maintainable.

15. In view of the above discussion, the present appeal lacks merit and is accordingly rejected. No order as to costs.